20-12-2012, 11:52 AM
PLC - Product Life Cycle
Product Life Cycle.pptx (Size: 212.78 KB / Downloads: 27)
The purpose of having a diagram is to help you understand the changes, in the revenue that is made, as you go through the different stages of selling a product, from the beginning, to the end.
Introduction
The seller tries to stimulate demand
Promotion campaigns to get increase public awareness
Explain how the product is used,
Features Advantages Benefits
You will lose money, but you expect to make profits in the future
Sales are low, and profits are below the line because your costs are greater than the amount of money you make
you have “negative” profit
Need to spend a lot of money on promotion
Growth
A lot is sold - The seller tries to sell as much as possible
Other competitor companies watch, and decide about joining in with a competitor product
“success breeds imitation” (Text)
Growth will continue until too many competitors in the market - and the market is saturated
At the end of the growth stage, profits start to decline when competition means you have to spend more money on promotion to keep sales going.
Spending money on promotion cuts into your profit
Maturity
Many competitors have joined - the market is saturated
The only way to sell is to begin to lower the price - and profits decrease
It is difficult to tell the different between products since most have the same F.A.B. - Features, Advantages & Benefits
Competition can get “Nasty” and commercials are intense
“Persuasive Promotion” becomes more important during this stage
That is to say, you have commercials almost begging the customer to still buy your product because you still make it just as good.
Length of Cycle Stages
Products move through the cycle at different speeds
sometimes introduction is very long, or very short, depending on how easy it is for the public to understand the F.A.B.
Not all products follow the same pattern
Life Cycle Length
Some products move very fast because they are new and have no competition so the intro stage is short, and they go direct to growth stage.
Speed of the PLC
Since the Intro Stage is getting shorter, and sometimes the Growth Stage doesn’t last too long (because competitors move in) companies must continually come up with new products
You can tell when they are in the growth stage because this is when they introduce new model variations, and some improvements to the product